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Hedge fund inside trader sentenced to six years in prison

A hedge fund trader was sentenced to six years in prison on Friday after being found guilty of using inside information to bet on the stock of the grocery giant Albertsons.

The trader, Joseph Contorinis, is alleged to have made $7 million for his fund after receiving inside information from an investment banker friend.

The friend, Nicos Stephanou, was working with an investment firm that was trying to buy Albertsons, and ended up doing so in January 2006 along with a consortium that included SuperValu and CVS.

In the months before the sale, Stephanou fed information about the deal to Contorinis and a number of other friends and family members.

The fund Contorinis worked for was a division of Jefferies Group Inc., located in Connecticut.

Stephanou pleaded guilty and is set to be sentenced later this month.

The case has been described as the beginning of the government's recent effort to crack down on insider trading at hedge funds, one of the most successful corners of Wall Street in recent years.

The case "should make plain that there will be serious consequences for those who corrupt thesecurities markets to line their own pockets," the U.S. attorney overseeing the case, Preet Bharara, said in a statement after the sentencing.